CHINA. A new e-commerce law in China will take effect on January 1 and further regulate the country’s online luxury goods market, writes Daily Jing, a content partner of The Moodie Davitt Report.
The new rules are generally interpreted as positive for the industry, but they are sure to change the way brands do business in China.
Rules will also have a negative impact daigou buy, according to Daily Jing. Daigou buy goods abroad (mainly cosmetics but also a wide range of accessories and other high-end and luxury goods, as well as basic goods such as powdered milk) and resell them (often via well-organized networks) on the continent. These products cost less and do not incur high import tariffs from China for customers in China.
“Daigou are being promoted more and more on social media like WeChat, but they will now come under scrutiny for their undocumented practices, âsaid Daily Jing.
“In addition to regulating daigou, the law also raises the tax exemption ceiling for cross-border purchases. The one-time purchase limit will increase from 288 USD (2,000 RMB) to 720 USD (5,000 RMB) and the annual purchase amount will increase from 2,900 USD (20,000 RMB) to 3,780 USD (26,000 RMB). Cross-border purchases under the new limits will be duty free and benefit from a 30% reduction on consumption tax and VAT. “
In an article to read here, Daily Jing spoke with experts in the fields of e-commerce and influencer marketing, as well as some of the sales platforms themselves, to find out what impact the new law will have on luxury brands.
In the short term, repression daigou could reduce an important source of revenue for luxury brands, but in the long run it will protect the way products are presented and marketed in China, he said. “And even with a narrowing daigou market, this law will not necessarily prevent consumers from seeking other methods of purchasing luxury goods.
Part of the services daigou providing, such as price and style consultation, could be assumed by e-commerce platforms, “provided they can insert these social elements into their businesses”.
One of the main goals of the new e-commerce law is to standardize cross-border commerce, according to Daily Jing. âIn a sense, the government is calling on e-commerce platforms to act as gatekeepers to prevent fraudulent activity. “
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* This article was originally published by the well respected DAILY JING, a content partner of Moodie Davitt Report.